Has been more than seven years since the ftc has appeared before the subcommittee so gentlemen, you are late and this is long overdue one of the most Important Agency the subcommittee funds. Policing most sectors of the economy with the crackdown on robo colors to expose sensitive personal information to analyze consolidation in the Healthcare Market with essential Health Services atop beep for Consumer Privacy violations. And respecting the privacy choices of customers we have seen some promising actions recently they did not take a break they have high profile settlements to launch antitrust investigation and we recognize the challenges we face thats why this years house appropriation bill has a 40 milliondollar increase proposed funding bumping at more than 10 percent. And then to understand how the ftc investigates these resources widely and also it is our duty as chairman of the ftc to see that existing resources are being used as efficiently as possible as efficiently as possible. By far the largest privacy settlement with that privacy violation. That is fine that doesnt represent is not clear that the corporate changes will head off future privacy violations we could raise questions of equifax settlement or youtube but why did equifax only had 31 million in punitive damages . Companies we worry about today are structured much differently than of the past. They can the ftc do better . With bigger monetary settlements or to send clear signals to be anticompetitive or Deceptive Behavior we look forward to hearing from the chairman but first i would like to recognize the ranking chair for his comments be my thank you for being here we all know the ftc basically has two primary missions the first is to protect from unfair and fraudulent practices. This includes protecting americans from Identity Theft with the dreaded telemarketing calls and certainly schemes against the most vulnerable and elderly. Also to make sure the markets are open and free with your comments its been seven years maybe there is a reason since 95 percent of all decisions have been unanimous. So congratulations you know there is tremendous debate we can expect that. And it is lot more challenging that you face its important that Technology Companies act in a transparent manner with the Technology Sector with the anti competitive Business Practices. So we must be careful not to stifle innovation and what we grapple with every day we have seen over regulation that can hurt Economic Growth so thank you for having this hearing i appreciate you joining us. Now i welcome the chairman for his testimony. Thank you. Members of the subcommittee am extremely pleased to be before you today and to be alongside my Dear Colleague mister chopra. The ftc is a highly Efficient Mission to protect consumers to maintain competition in most sectors. We are progressively pursuing Law Enforcement including recordbreaking settlements including equifax and youtube using an old statute to bring the privacy Data Security act is limited. These limitations have occurred on the ability to protect consumers which is why we urged congress of Data Security legislation which grants civil penalty Penalty Authority and jurisdiction over nonprofit nonprofits. In addition to privacy and Data Security we continue to have a broad range of enforcements including older adults and servicemembers. On the competition side enforcement action continues to be a big priority like pay for delay protects generic competition which helps to keep down drug prices to address concerns of the power of big tech we have created a Technology Task force to concentrate expertise and conduct by Technology Companies. We want to think this committee for the additional 40 million to the ftc house fiscal year 2020 general appropriations bill i assure you we will use that additional funding although 40 million is a very large number more than half is the mandatory compensation cost related to the Agency Operations an additional expert witnesses. The remaining portion for additional personnel to focus new staff additions of Consumer Protection doubling the Technology Task force and to hire more economists. Finally law principal difference occasionally leads to a split decision the ftc predominate works in a bipartisan fashion using every resource to promote competition we look forward to the subcommittee and i look forward for your questions. Thank you Ranking Member and members of the subcommittee but i appreciate you holding this hearing today i am honored to sit alongside chairman simons to represent the ftc. Congressional oversight ensures regulatory and enforcement agencies are accountable to the public and i welcome this oversight. I know it makes agencies stronger and as congress tackle some of the Biggest Challenges of our economy and National Security and society the ftc should be a critical piece of that puzzle the stakes could not be higher. For example how do we combat pharmaceutical industry abuses contributing to outofcontrol drug prices . Thats the difference between left log lifeanddeath. What can we do to make sure americans can get a fair pay raise it up job market rather than being squeezed with noncompete agreements had we reversed the worrisome decline of new business formation to make sure american entrepreneurs are making sure others that are not protecting their turf or safeguard Sensitive Data by those here at home and those that are seeking to do us harm had we deal with the rising dominance of big tech using facial recognition and so much more. Congress is currently considering an increase funding for the ftc and they share the chairmans commitment to use every resource effectively to deliver real value to the public the ftc hearings convened over the last year were a reminder of the importance of selfanalysis we must always be searching for ways to be more effective. For example what we do to leverage the resources of the federal and state Law Enforcement partners for victims and accountability above the law. How do we codify existing case law so get those penalties returned to taxpayers or for honest businesses that play by the rules were harmed by those that cheat. We are actively thinking of new ways to use those authorities the way congress entrusted to the agency. We appreciate the opportunity to work with you to tackle these challenges and opportunities and i look forward to your question questions. Commissioner with the facebook and youtube settlements can you give us a deeper dive what you think the ftc can you differently or better to address these issues . The corporation has been a managerial challenge to have serious dysfunction repeatedly violated the ftc order almost immediately perk i was not happy with the outcome of the settlement. I think it provided blanket releases of claims that were unspecified. Money . 5 million although it is a record, will it change of firm that makes that much money very quickly . One of the largest corporations in the world. And wall street reacted they did not find that big of a deal most insulting now is the insignificant so now i find all these concerns but since the time we finalize that settlement we have now heard of more and more problems just recently, a few days ago 64000 apps were suspended from the Massachusetts Attorney General Court filing and phone numbers that just keeps going and going and i am concerned. And with that ongoing issue that was discussing can you add into this discussion because of a risk. We do not have the authority ourselves we have to go to court so in this case there is a widespread view to spend years in logic litigation and with the relief of the settlement was far greater than any court would have. In terms of the settlement goes to litigation if thats the right choice it was far greater than we could have gotten now hopefully soon when they finalize the papers and once that happens. In terms of the 5,000,000,022 were 23 percent of profits from last year that much profit should make them think how they run their business. So a big part of the settlement is the injunction relief. We have a new committee of the board. We have a requirement on Mister Zuckerberg he served by quarterly with the Privacy Program that is mandated he cant just stick his head in the sand he gets mandatory information flow that he has to review. Very beefed up Third Party Assessor we have the ability to hire and fire and then the sec itself has ability to monitor more than it had in the past. Something thats a little bit more pressing for me is when a bad actor calls up a Telecommunications Company and to activate a sim card on a different device and then have mobile Identity Theft with applications and passwords and all of that. So the ftc responded to this a couple years ago it just seems to identify it. And then his phone was taken over. So what can consumers do. You share your concerns and this is a big problem. And potentially to get into their bank account so this is a serious problem. With website guidance to consumers this is what we are focused on. As two factor authentication spreads generally is a good thing most people use that through the personal cell phone so now that is a big vulnerability. So for me it is a broader issue of Identity Theft that has problems of data Data Security with huge impacts on commerce and National Security. If we dont take this seriousl seriously, we cannot quantify the harm that can come from tha that. That twostep verification doesnt stop us. No. It makes it more damaging. What can the federal government do to protect consumers . That consumers are doing everything they can. And those that are giving out personal information. So they can get enough information to go through the security questions they can answer them. And how to make that more secure. Another issue that has been on my mind, we both have this question of the cybersecurity threat, we had an ftc meeting recently of the location sold from the same companies. The ftc has some jurisdiction to take action against those practices. Can you give us an update . So with this area it is unauthorized sharing. We do not have the jurisdiction to bring cases against common carriers. We have asked for that immunity to be reversed but we have brought several cases for unfair deceptive practices in connection with this problem. For example we allege the networks that dont disclose the fact in several nonpublic investigations that are going on right now. Thank you for being here. Chairman and thank you Ranking Member. To the settlement the Commission Already has Strong Authority with online protection so to use those enforcement tools that are available to deter actions that infringe on childrens rights of privacy. Surprised to learn ftc officials suggested weakening restrictions on how data can be collected from those watching to be aimed at children. We want i have not reviewed the statement. It was made by him that does not speak for me or any other individual commissioner. I do not agree we should be showing any sort of weakness. We are doing a review and if we do weekend the rules in a harmful way that is not something i want to support obviously congress will have to review that has the Congressional Review Act to overturn thats we should go into it looking for ways to make sure protections are stronger and then we can have the tools to deter the worst. But we are already seeing how the massive accumulation of data on children is a lot and we should take that seriously. And specifically as it relates to children and data a grandma with a four yearold we have to do everything that we can to protect children california Consumer Privacy act is considered the most extensive privacy law and the country. Congress and state legislators are working on legislation to protect on these privacy protections in the us. Are there any elements of the law you think should be adopted . There is a lot of details. Some come to mind. There is a very clear way to internally analyze of violations in the Different Levels of penalties for intentional violations. I think of a clear liability for those who violate the law that will actually protect data and make sure they dont abuse it also some new Consumer Rights are a part of that i think all of that is good but we also need to make sure we are looking at how to pass those underlying incentives that relates to collecting geolocation data all of this is monetized and thats the Business Model which is so many of our problems. This is an issue of zerotolerance echo if you accidentally swipe your card and know there is a zero balance in your checking account. They dont give you a break. You are punished. And it should be in that same line of zerotolerance. That also works with the state attorney generals with California Law or other privacy laws impacted in any way . I always think its good that when they have authorities and the ability to get penalties, so for me, i am encouraging looking at these abuses in the tech area we are seeing more that will give us more leverage at the table. In recent years consumers are reporting an increase of Hotel Booking scams while they face one falsely claimed to be affiliated with proprietors of a hotel. Im curious to know what actions the ftc takes if thats an issue that comes up often . Just like facebook or zerotolerance. Is obviously a problem in those scams they are heavily facilitated by an advertising model of a larger firm. They dont police a lot of their content and i have witnessed this firsthand with the student debt scams that started several years ago and most of the ways they were reaching people were through facebook ads. So google and facebook claim they have no liability but we have to overlook that because. They should be held liable. They are monetizing some of that also their Business Model so they profit from that. We have to move on. So one of the things to go not only after the fraudster but those who help them. Thank you mister chairman. Servicemembers are potential to targets they are more likely to target the military community for any one thats earning a paycheck for the first time how big of an issue is it quick. Its a big priority for us. And to be opposed with the military and to use that forprofit schools to be associated with the military so thats just one example of what they do. Military consumer. Gov. And then to set up budget. And to reach those servicemembers. And doing a pretty effective job. And. And with those pcs orders. We need to focus of these incentives that are driving the targeting of military families but that interaction in the schools that target them. And that is because of a rule that says you have to get 10 percent of federal funds , of your revenue from outside of the department of education. We need to do fix it. Everyone needs to enforce it. The department of education allowed us to go on for years and years under multiple administrations. Very good point. I know they also operate a do not call registry with complaints. It is effective telemarketers but i understand you are working with the fcc and it regulates the Telecommunications Industry on reducing robo calls. What actions are being taken that inappropriately target americans . This is a multifaceted approach and very high priority for us. We have a sweet couple of months ago involving a large number of state and local Law Enforcement partners. In addition, the. [inaudible] those are the the other thing is we ran the Technology Contest which is in order to generate solution and that produced several different technologies on the market now. It answers the call and keeps the caller on the line so we are not wasting their time and money, not yours. Do you foresee what americans can expect . Thats really hard to say. We encourage them to work with now what i but is being implemed with this shake and stir program that would require identification of the calls and would dramatically reduce. Thank you mr. Chairman. I want to thank the chairman and commissioner for being with us this morning. I want to tell you about one such consumer. Mike owns a minority owned Small Business based out of st. Petersburg in my district. His daughter was diagnosed with diabetes and since diagnosis the family focused on her health and treatments. Mike told me about the thousands hes had to pull out of the families four o. One k. And the Creative Things they did when they have nowhere else to turn. He left the corporate job to start his own business but the insurance ran out. He had to pay 128 for a threeday supply of taylors lifesustaining insulin. In fact, i would ask you to look at the chart behind me. They show that prices over time. The manufacturers are increasing the prices dramatically and they are giving it in long step. Theone step. They are not driving these increases and yet the drug that sustains americas 30 million diabetics keep skipping more and more expensive while the Drug Companies continue to skyrocket. They know the market is broken. They know the monopolies and the 30 Million Consumers cannot influence price. They need their insulin or they will die. It is their most egregious. At its most harmful and my question for those of you that for you, commissioner specifically because you mentioned the outrageous cost of prescription drugs in your testimony. What is the ftc doing to stop and what additional authorities would you need to save consumers wise from the greed of the Drug Companies . I dont want to comment on any specific drug or investigation, but if this pricefixing or anticompetitive conduct. We had t have to take that seriy and use the authority. One of the things i think is a concern for years and years is how pharmaceutical companies abuse their intellectual property filing more patterns, creating those that get engaging in paper delay, all of this nonsense you need to think about remedies for the misconduct because its not just about doing things here and there to get the prices down. Its also about going after violation the anticompetitive conduct in this space. We look at pricing overtime and monitor the drug prices and if we see something fishy, we look at it. It looks likif it looks like sog related to pricefixing we make a referral to the department and often finds that results in them taking action. If it comes back they dont think its criminal that something we will look at and investigate. Are there other tools that you would like to have at your disposal in order to be more effective . Theres a bunch of legislation circulating now that deals with the delay and the abuse of citizen conditions and things like that and does deserve some careful attention and that type of effort. Thank you, mr. Chair. Via the settlement is out on and we want to get into that a little bit. The 5 billion each waited to 23 of annual profit as a factual matter. Are you on the same page with it is maybe 22 . And you felt that was kind of a slap on the wrist . I think here is the issue is that the Business Model is still in tact in that they can still collect all sorts of data and monetize it. So for me there isnt a fundamental change for the behavioral advertising Business Model, which motivates them to engage in this massive Data Collection and ultimately creates problems. I understand that. Commissioner, in your dissenting statement that settlement, you said breaking the law has to be easier, has to be riskier than following it, and i dont think anyone disagrees with that. I also looked at the commissioners to send. Is there was very free2 decisi . It was a good discussion and one thing she brought up is that this wasnt just breaking the law. It was violating a court order which in my mind as an elevated level of seriousness, particularly because it is intentional conduct, intentionally illegal conduct thumbing their noses at the courts and i want to go back to you, mr. Chairman. What do you make of that, and i also want you to touch on a commissioners comments that you read and send about the value of actually going to court saying lets see what the courts rule on this. I never met a judge that sat still for the intentional violation of court orders. If there is a reasonable chance of getting significantly more in the litigation and you u do in the settlement that just was not the case here. So, going to court may have been cathartic for some people but it would have taken a long time and resources and it wouldnt have been under the time period. I think it was in a jury trial because the Civil Penalties are involved. Did you do research, with a prosecuting the cases fax for this intentional violation of the court orders. We talked to a lot of people experience litigating these type of things and it wouldnt even be remotely close. Was it a part of that that there had never been an award at high . The other thing that was important to get the settlement effective with a 5 billion as that would set a new floor so rather than litigate for three years and get them the order of the point than we are in a position to get even more relief because we say to the judge we have 5 billion last time and it still wasnt good enough. Back to you, commissioner. I dont agree that it is about anything emotional. A trial or further investigation we have the ability to compel testimony. I think not clearly deposing was a mistake because when youre able to directly. The name individuals with small firms that are controllers. Theres a state Court Litigation in multiple jurisdictions now through the discovery process we are learning about more and more potential wrongdoing. They made the calls and fundamental business incentives that would be the only way to comprehend the fix for problem. [inaudible] the commissioner lost a few lawsuits over time and maybe as a result of that and some of those decisions and testimony earlier not agreeing to the demand on the prescriptive restrictions on the Business Practices beyond what the courts say. Can you help us understand the justification for adopting the approach to the head of the congressional debate of the changes to the act to grant the authority that you are seeking . I dont really understand the question. The reason we are asking for privacy and Data Security authorities like Civil Penalties or con i, if thats what you are looking at . As you are seeking to act in the Committee Also seems youve advocated for the decrees as well. In the 1980s seeking to redress that enables us to stop them in their tracks to get asset freezes before they dissipate all the money and recover what we can recover on behalf of consumers and for 30 years thereve been quite a number of Circuit Court decisions there are those that question that and we think its really important that the congress clarify that the prior existing view is the right to use that we can continue to stop fraudsters, freeze their assets. Do they ever impose or ask the business is to go beyond with court sees as the appropriate response . With respect to the position of chairman as they become in many of the courts for years have interpreted the statute to allow us to get that money that is illgotten gains or redress. To make sure that is clarified so firms to exploit some legal ambiguity and we can continue doing our work. Now companies are more likely to advocate the resources further. If we could verify, then we have this right and that would mean less vacation. We think we do but there is ambiguity thatheresambiguity tn incentive for the different kinds to not settle with us and litigate. One final question we saw most if not all attorney generals from the state engaged in the debate as well. How did these state investigations impact your work and in some of the decisions youre making . They are very highly valued partners and we collaborate with them on all sorts of levels in the competition area. So this is a standard thing where we are working on the same matter and we cooperated with each other. It hopes to leverage our resources. It is an all hands on deck kind of moment and i really value their being involved. Ive been part of many multistate arrangement and i try to be in constant communication with those who are eager to make some change, so i welcome this and on the Congress Shall oversight, i think we have to keep a log of our investigation, the content of its confidential but theres always value of Congress Investigating as well because the public is always learning about some of these Business Practices. I am in agreement with that part of it but it raises concerns about to other entities that need to have disagreements. You want a case back in may and the department of justice cited whats happening, how do we address this and then the potential for the duplicative jurisdictions conflict in. You share this over antitrust enforcement with the doj and that has generally worked well. Where are we now on that regard . I am refused from the matter of needless to say watching from outside the circum dance i dont think anyone was happy that it was highly unusual. The only other times the six gimmicks can you elaborate on how highly unusual . The only other time i know where Something Like this happened is one of our initial cases where there was a petition filed into the department of justice did not want to support and in fact the government didnt support the petition. They took a different stance so i think that is the only instance i am aware of. The field is still ongoing and i was proud of the outcome in the District Court level. I also found its not just an usual, but very mysterious as to why the department of justice decided to weigh in. I think it raises questions about their commitment to the Fair Administration of the antitrust laws so i was very disappointed by it, but we will continue to try to seek relief for all of the victims of the anticompetitive behavior. Generally avoiding the issues of how you manage that. So, generally we have a clearance agreement in the Justice Department 70 or 80 years its been a long time. To start the investigation of a matter without it being cleared the other agency and the general approach is not to clear anything that would be an ove overlapping investigation. Its what we are investigating and we form this on the trust decided on the hightech platforms to look at not only currently with your doing historically that what they are doing for the past mergers they participated in and see if any of that is worth pursuing on the Consumer Protection side we have the privacy issues and potentially Data Security issues and two parts but you with that. It took the lead on the case and the Privacy Division which looks at six or seven of the largest corporations in the world are chinese or u. S. Tech companies so it is involving everything beyond what the chairman said, take reviews, facial recogniti recognition, so many potential abuses against consumers and Small Businesses, competitors though if the Congress Cares about competition and cares about a new startup being able to challenge, you all need to support aggressive antitrust enforcement and aggressive enforcement against consumer abuse as well. One of the main things you might look for is a situation where the platforms can engage in exclusionary conduct against become an event might not be a direct competitor immediately that might turn into one. An example of this is repeated in the cycle. Looking at the merger venture and to what extent was the purchase of many, many firms part of the way to eliminate the competitor and maintain. They are also looking at them to determine was it part of a plan to essentially shut down the potential. Its to buy the companies. There could be a pattern as the commissioners have involved in an overall kind of strategic approach to deal with this ethic and competitive threats. To help Small Businesses compete out there in the marketplace. We want Small Businesses to get big. Thats what a freemarket system encourages. We dont want to get in the way or allow companies that are officially stop the process from occurring. I am concerned about the argument that some in this sector are making that they need to stay vague and dominant in order to compete against china. We shouldnt try to replicate the chinese system. We should be having lots constantly innovating, challenging the leader because that is actually how we get ahead, not just by allowing the incumbent. I think it is proven when they try to promote National Champions the end of undermining the companies they are trying to benefit and that hurts everybo everybody. Eventually those jobs are going to go away because they are not champions but coming from other parts of the globe. Thank you for holding this hearing and whatever time i have i will yield back. I want to talk about elder fraud a little bit. They had 1. 3 million reports about government imposters, people pretending to be from the hhs, irs and what we have seen is theyve become so sophisticated they can have the caller id of the person at home show the actual name of the agency that they are pretending to be including the Social Security administration. 2019 we have seen an explosion of reports regarding Social Security administration posters 64,000 reports of the first six months. Seniors and alters are the most vulnerable in these type of scheme and ideal targets for Social Security schemes given that Social Security tends to be their biggest form of income. How are they addressing these calls targeting seniors, specifically those pretending to work for the Social Security administration . That was fairly effective. More broadly in march of this year and International Crackdown these were primarily focused on tech support there has been an mandated report on older fraud of Law Enforcement actions of data analysis. That we host the Common Ground conferences to work collaboratively and we host the one in minnesota. And you have that ongoing partnership. And impasse conference congresses with the elder abuse prevention act that includes those crimes to incorporate trainings and screenings and federal activities. So how do you make sure those warnings reach Senior Citizens who have more limited access to technology. Its called pass it on and with this program is designed to do is get Elder Citizens to advocate in their own community to take our material and pass it on because sometimes you thank you know everything and dont want to be told what to do but that is something you could do outofthebox so that approach seems to be that degree of success. We always need to look not those scams because we have to look up the chain because who provides the infrastructure of the crimes that are perpetrated. Thank you mister chairman. In my days as prosecutor. That depends on the situation but sometimes they come from inside but then to put them in for this reason but this is out of reach. Every time i have done one of these. We need to push the carriers. Mister chairman mister commissioner thank you for being here we appreciate your service we are adjourned. [inaudible conversations] [inaudible find a balance ben Second Amendment rights and gun violence
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